Emerging economies approve new bank and a reserve fund

Thursday, July 17th, 2014 6:55:00 by
BRICS new development bank

The bank of the BRICS, ie the group of countries comprising Brazil, Russia, India, China and South Africa, is emerging. It will be based in Shanghai. Its first president will be Indian, his first director general, Brazilian and its first governor, Russian. It was born to confront, from a financial point of view, ” deficits in infrastructure and other development needs ” of these States; and is created because the International Monetary Fund (IMF), which is insufficient to do so, as these countries, accuse this international institution of lack of representativeness, credibility and effectiveness.

The New Development Bank (NDB) will have $ 100,000 million to finance projects. The rest constitute a reserve fund (100,000 million) will serve to overcome anticipated financial storms that downed on the components of this group. The strength of the VI Summit of the BRICS, held in Fortaleza, which brought together the presidents or prime ministers of these countries has had the desired result: a group of developing countries, which in recent years have grown, which is unmarked of the institutions created by the developed countries, anchored in the crisis.

Brazilian President Dilma Rousseff, said Tuesday after the announcement that the establishment of the new bank the BRICS group “wins in density.” Russian President Vladimir Putin advocated the new bank “will be the basis for major macroeconomic changes.” The project, on Monday said Chinese President Xi Jinping, will ” improve the system of global governance and broaden representation and the right to speak in international affairs of all emerging countries.”

In this regard, Dilma Rousseff, following the signing of the contract, said the creation of this bank is not against the IMF. ” It does for ourselves,” he added. ” The world has become bilateral and institutions that represent it should be.” The Brazilian press was much speculation about who would get to keep the seat and who with the first presidency (vital, since from it the bank’s future will be designed). In the end, China, the most powerful member of the group, got the NDB based in Shanghai. President Rousseff was asked if Brazil had given in order to get the negotiations going. “The idea of the investment bank for emerging countries was India. It was just that that country was the first president,” said the Brazilian president. The Brazilian Finance Minister, Guido Mantega, adding that what matters is not the nationality of the president or the country hosting the headquarters was the number of shares that each country holds: ” And here each group member has the same number of shares because it provides the same money. “

The bank still has no date for its effective implementation, but already exists. And that is significant within this heterogeneous group of countries that is difficult to define. In this regard, the Brazilian economist José Augusto Castro, president of the Brazilian Foreign Trade Association states that the BRICS are not a bloc: “They are a set of letters led by China.” This is true, but so is that they alone amount to a fifth of global GDP and account for 40 % of the population of the planet. Castro recalled that these countries are located on different continents, very separate geographical and in some cases, politically. In fact, what characterizes the BRICS and unlike other groups of countries is their pragmatism and fact file the edges policies to reach a common minimum resulting operational.

Josefina Guedes Brazilian economist believes that this group of countries, beyond their obvious differences, they have a key common feature: “These are countries that are developing, fighting a common problem: inequality, the urgent needs of health, education or infrastructure. ”

Also serve as a financial platform to undertake infrastructure works, the new bank boost trade among the five members of the group, which now moves about 54,000 million and focuses almost exclusively on the trade relationship between China and the others.

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